Kelegian

On December 31, 1986, John Mgrdichian (Mgrdichian), a member of the board of directors (Board) of the California Commerce Club, Inc. (Corporation), purchased 200 shares, 14 percent of the outstanding shares, of Corporation stock from fellow Board member Herbert Stem (Stem). This purchase brought Mgrdichian’s holdings to 330 shares, 23 percent of the issued and outstanding shares of the Corporation. After Mgrdichian’s death on November 26, 1990, plaintiff and appellant shareholders Haig Kelegian (Kelegian), Zack Anter (Anter), Harry Massman (Massman), and Peter Lynch (Lynch) (collectively as appellants), brought a legal action on behalf of the Corporation and against Jasmine Mgrdichian, individually and as representative of Mgrdichian’s estate, and the Corporation (collectively as respondents). Appellants contended that Mgrdichian’s purchase of shares from Stem should be voided because the purchase was a misappropriation of a corporate opportunity. After a court trial, the court found appellants had failed to carry their burden of proof to establish that the corporation had set a specific policy to repurchase shares of the corporation. Accordingly, judgment was entered in…